RRSP vs TFSA at $75k in Ontario: The exact tax math

At $75,000 in Ontario, you're sitting in the 31.48% marginal tax bracket. That means every dollar you put into an RRSP saves you 31.48 cents in taxes this year. Every dollar into a TFSA saves you nothing upfront - but grows tax-free forever.

The math isn't close. Put $7,500 into an RRSP and you'll get back $2,361 on your tax refund. Put that same $7,500 into a TFSA and your refund stays the same.

But here's what most people miss: that refund isn't free money. It's your own money, returned because you overpaid during the year. The real question is what happens over 20 years.

The RRSP path

You contribute $7,500. Ontario gives you back $2,361. If you're smart, you invest that refund too - let's say back into your TFSA since you've used up this year's RRSP room.

So you've really invested $7,500 + $2,361 = $9,861 total. The RRSP grows tax-deferred. When you withdraw in retirement, you pay tax on everything - both the original contribution and all the growth.

The TFSA path

You contribute $7,500 of after-tax money. No refund. But everything that grows in there is yours to keep. No tax on withdrawal, ever.

The 20-year outcome

Assume both accounts grow at 6% annually. After 20 years:

• RRSP: $7,500 becomes $24,037. But you'll pay tax when you withdraw. If your retirement tax rate is 25%, you keep $18,028.

• RRSP refund invested in TFSA: $2,361 becomes $7,567. All yours.

• Total RRSP path: $25,595

• TFSA only: $7,500 becomes $24,037. All yours.

The RRSP path wins by $1,558. Not huge, but not nothing.

When this math breaks

The RRSP advantage disappears if your retirement tax rate equals your current rate. At $75k in Ontario, you're at 31.48%. If you retire with the same marginal rate - maybe because you have a solid pension - the accounts are roughly equal.

The RRSP loses badly if your retirement rate is higher. This happens more often than people think. Your mortgage is paid off, your RRSP is now mandatory RRIF withdrawals, maybe you have rental income. Suddenly you're pulling $80k+ in retirement and paying a higher rate than you did while working.

The 2025 contribution limits give you room to split the difference. You can put $7,000 into your TFSA and still have $25,490 of RRSP room left over.

The real advantage

At $75k in Ontario, the RRSP's tax deferral is strong enough to matter. You're in a meaningful tax bracket but not so high that you can't possibly retire at a lower rate. TaxSplit.ca will show you exactly how the refund changes if your income moves up or down.

The catch is timing. RRSP contributions are locked until retirement - or you pay a withholding tax to get them out. TFSA money you can withdraw anytime, for anything, without penalty.

If you might need the money before 65, TFSA wins regardless of the tax math. If you're saving for retirement and won't touch it, the RRSP's $2,361 refund is hard to ignore.